Rocket Dockets, and Preliminary Injunctions

Volume 16, No. 6Summer 2005

Intellectual property owners are ofteninterested in quick, effective relief againstinfringers. Damages and a possibleinjunction, awarded only after a full dis-trict court proceeding, may not be satis-factory; the market may have beendestroyed, prices irreversibly eroded, orthe product life cycle may be too short toawait lengthy district court litigation. Insuch situations, the IP owner has threeprimary alternatives: filing the case at theU.S. International Trade Commission(ITC); filing it in a rocket docket; orrequesting a preliminary injunction. Thereare advantages and disadvantages to each

of these alternatives that potential plain-tiffs and their counsel considering thesealternatives, as well as potential defen-dants and their counsel facing such pro-ceedings, should understand.

The U.S. International TradeCommission and Section 337Infringement actions before the ITC aredescribed in more detail in “Using theTariff Act’s Section 337 in IP BorderEnforcement,” by Bryan Schwartz (seepage 7 of this issue), so here we offeronly a brief summary. Section 337 of the

Quick IP Relief—The ITC,Rocket Dockets, andPreliminary Injunctions

By James B. Altman

Protecting trademarks and trade names atthe border can be a vital component in acompany’s global brand protection andenforcement program. The U.S. Customsand Border Protection (CBP) (formerlythe United States Customs Service andnow part of the Department of HomelandSecurity) provides effective tools forbrand owners to combat the flow ofinfringing goods into the United States.1

This article explains how the CBP enablesbrand owners to monitor and enforce theirtrademark rights at the border through

administrative and law enforcementmechanisms. We will also examine howfederal court injunction orders can beenforced through the CBP.

Utilizing the U.S. Customs andBorder ProtectionThe CBP protects marks registered withthe United States Patent and TrademarkOffice (USPTO), including registered collective marks. See 19 C.F.R. §§133.1–133.7. While recordation with the

Committee CochairsMarjory G. BasileMiller Canfield Paddock & StoneDetroit, [email protected]

Janice V. MitriusBanner & Witcoff, Ltd.Chicago, [email protected]

Newsletter EditorsEditor in ChiefSteve GardnerKilpatrick Stockton LLPWinston-Salem, NC [email protected]

Editor at LargeBrad LyerlaMarshall Gerstein & Borun LLPChicago, [email protected]

Subcommittee Article EditorMelanye K. JohnsonE.I. du Pont de Nemours & Co.Wilmington, [email protected]

Young Lawyer Oriented EditorJames Peterson LaFollette Godfrey & KahnMadison, WI [email protected]

Litigation TipsDouglas N. MastersLoeb & LoebChicago, [email protected]

Repurpose Editor Henry C. SuFenwick & West LLPMountain View, [email protected]

Managing Editor Monica Buckley

Art DirectorAndrea Siegert

Intellectual Property Litigation is published quarterly by the Committee on Intellectual Property Litigation, Section of Litigation, American Bar Association, 321 N. Clark Street, Chicago,IL 60610. The views expressed within do not necessarily reflect the views of the American Bar Association, the Section of Litigation, or the Committee on Intellectual Property Litigation. © 2005 American Bar Association

Continued on page 11


Trademarks at the Border: APractitioner’s Perspective

By Steven J. Wadyka, Jr. and Janet Shih Hajek

Published by the Intellectual Property Litigation Committee of the ABA Section of Litigation © 2005 American Bar Association, All Rights Reserved

This Issue: Infringement Outside or Entering the U.S.

155301 8/30/05 9:11 AM Page 1

2 Intellectual Property Litigation � Summer 2005

By the time you read this newsletter,the 2004-2005 bar year will beover. It has been a great year. Our

committee sponsored several programsand breakfast meetings at the Section ofLitigation’s Annual Meeting in New Yorkand the ABA Annual Meeting in Chicago.We hope that you had a chance to attendthe meetings, participate in the wonderfulCLE, and network with your peers. If not,start planning now to attend the 2006Section of Litigation Annual Meeting inLos Angeles and the ABA AnnualMeeting in Honolulu.

We will soon submit program propos-als for the 2006 meetings. If you haveprogram proposals or breakfast meetingsuggestions, please let us know. Asalways, we encourage you to check thecommittee website for up-to-date informa-tion on committee activities, including thedates, topics, and hosts for the roundtableprograms: www.abanet.org/litigation/com-mittee/intellectual/home.html.

In addition, if you are interested inbecoming more active in the committee,please contact us.

This newsletter focuses on the specialissues that arise when alleged infringe-ment originates outside the United States.When this issue arises in your practice, do

not forget to review statutory defenses orexceptions that may apply. In this regard,35 U.S.C. section 272 is one statute worthremembering. Under this statute, “the useof any invention in any vessel, aircraft orvehicle of any country which affordssimilar privileges to vessels, aircraft orvehicles of the United States, enteringthe United States temporarily or acciden-tally, shall not constitute infringement ofany patent, if the invention is used exclu-sively for the needs of the vessel, aircraftor vehicle and is not offered for sale orsold in or used for the manufacture ofanything to be sold in or exported fromthe United States.” Section 272 of thePatent Act offers a rarely seen but poten-tially powerful “temporary presence”defense to infringement liability for for-eign vehicles using patented inventionsin the United States. Section 272 andsimilar acts of other countries preventdomestic patent laws from interferingwith international commerce.

In 2004, the Federal Circuit construedthis rarely interpreted provision of patentlaw. After construing the statute, the courtreversed a preliminary injunction that thedistrict court granted to a manufacturer ofrailway cars. The dispute, betweenNational Steel Car Ltd. and the Canadian

Pacific Railway, related to a patent ownedby National Steel for a depressed center-beam flat car used to haul lumber. Theaccused Canadian Pacific rail cars shiplumber from Canada into the United States90 percent of the time, and the remaining10 percent stays in Canada. The rail carsreturn from the United States to Canadaempty almost 100 percent of the time.

According to the district court, therewas no question that rail cars infringedNational Steel Car’s patent. The FederalCircuit held that a rail car used to haullumber into and out of the United Statesmeets the infringement exception under35 U.S.C. section 272, which excusesinfringement for any vehicle that entersthe United States on a temporary basis.Although the district court had found thatthe accused railway cars were in theUnited States for about 57 percent oftheir useful life, the Federal Circuitdefined “temporary” as a vehicle enter-ing the United States for a limited periodfor the sole purpose of engaging in inter-national commerce. National Steel Car,Ltd. v. Canadian Pacific Ry., Ltd., 357F.3d 1319 (Fed. Cir. 2004). Attorneysshould consider section 272 in any situa-tion involving the use of a patented inven-tion in international transportation. �

Message from the Chairs

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ABA Section of Litigation � Intellectual Property Litigation Committee 3

Patent law proscribes as directinfringement only those unautho-rized acts of making, using, offer-

ing to sell, or selling a patented inventionthat occur within the United States.1 Thisexpress limitation in the statute has longbeen a critical feature of the United Statespatent system, which “makes no claim toextraterritorial effect[.]”2 “The right con-ferred by a patent under our law is con-fined to the United States and its Territories. . . and infringement of this right cannotbe predicated of acts wholly done in a for-eign country.”3 The limitation emanatesfrom the fact that Congress’s power toenact a patent statute is itself “domestic inits character, and necessarily confinedwithin the limits of the United States.”4

Because “these acts of Congress do not,and were not intended to, operate beyondthe limits of the United States[,]” a“patentee’s right of property and exclusiveuse . . . derived from them . . . cannotextend beyond the limits to which the lawitself is confined.”5

One might assume that the statutorylanguage is simple, quite clear, and there-fore free from controversy. If an act ofmaking, using, offering to sell, or selling apatented invention occurs anywhere in theUnited States or its territories (e.g., PuertoRico), then there is an instance of infringe-ment actionable under section 281.6 Yet therecent decision from the United StatesCourt of Appeals for the Federal Circuit inNTP, Inc. v. Research in Motion, Ltd.7 (theNTP case) demonstrates that the languageof section 271(a) is far from being uncon-troversial or straightforward. This articlereviews the salient facts of the NTP caseand parses the question of territorialityunderlying the court’s opinion.

The Facts and the Issue in the NTP CaseThe NTP case concerns the allegedinfringement of NTP’s patents, whichclaim the integration of electronic mailsystems with radio frequency (RF) infor-mation transmission systems,8 byResearch in Motion’s (RIM) highly popu-lar BlackBerry system. The accused sys-tem uses “e-mail redirector” software to

retrieve incoming e-mails from a user’smail server and to encrypt and route themto his or her handheld wireless messagingdevice. Being “pushed” out to the remoteuser by the BlackBerry redirector soft-ware, an e-mail message leaves its regularwireline network (such as an office LAN)and travels on a wireless network (such asGPRS) supported by the user’s handhelddevice. A component of the accused sys-tem known as the BlackBerry Relayserves as the gateway between the wire-line network and the wireless network,translating and routing each e-mail mes-sage for delivery to the remote user.9

RIM moved for summary judgment ofnoninfringement on the grounds that therecan be no direct infringement under section 271(a) because the BlackBerryRelay component of the accused system islocated in Canada.10 The district courtdenied the motion, finding a genuine issueof material fact as to the location of theRelay.11 At trial, however, the district courttreated as fact that the Relay is located inCanada but determined as a matter of lawthat the location of the Relay does not pre-clude a finding of infringement by thejury.12 So instructed, the jury subsequentlyreturned a verdict in NTP’s favor, findingRIM to have committed direct, induced,and contributory infringement.13

On appeal, RIM assigned as error thedistrict court’s interpretation of section271(a) and its application to the accusedBlackBerry system.14 In December 2004,the Federal Circuit issued an opinion affirm-ing the district court’s application of section271(a) to RIM’s accused system,15 but itsubsequently withdrew that opinion in favorof a revised and more fulsome analysis ofthis issue.16 The revised opinion resultedfrom RIM’s filing a petition for rehearing,which was joined by several amici, includ-ing the government of Canada.17

In its revised opinion, the FederalCircuit framed the question as “whetherthe using, offering to sell, or selling of apatented invention is an infringementunder Section 271(a) if a component orstep of the patented invention is located orperformed abroad.”18 The court discerned

a lack of clarity in the language of section271(a) with respect to the interplaybetween the territoriality requirement(“within the United States”) and the“infringing acts” clause (“makes, uses,offers to sell, or sells any patented inven-tion”).19 In its view, this lack of clarityraised an open question whether there canbe direct infringement consistent with theterritoriality requirement if “the locationof at least a part of the ‘patented inven-tion’ is not the same as the location of theinfringing act.”20

In answering its question, the FederalCircuit found the Deepsouth case21 to beunhelpful because both the infringing act(making the operable assembly) and theresulting patented invention (the assem-bled machine) were wholly outside theUnited States.22 By contrast, it regardedDecca Ltd. v. United States,23 a 1976Court of Claims decision, as “provid[ing]a legal framework for analyzing this case”because it involved an infringing act (useof a radio navigation system) within theUnited States and a patented system forwhich one component (a transmitting sta-tion) was located in Norway.24 Not onlydid the court consider Decca to supply theanalogous fact pattern, but also to instructthat the territoriality analysis must bemade separately for each infringing actand each type of claimed invention.25 Tovisualize this, one can imagine a matrixwith each type of infringing act corre-sponding to a discrete row and each typeof patented invention corresponding to adiscrete column. Each box of that matrixmust be separately analyzed. In this case,RIM’s infringing acts in question are“use” and “offer to sell/sell” and NTP’spatented inventions in question are aclaimed system and method/process.

The Territoriality AnalysisExplainedThe Federal Circuit began its territorialityanalysis by examining direct infringementbased on “use.” With respect to NTP’sclaimed system, the court saw Decca asfurnishing the applicable rule: “[t]he useof [such] a . . . system under Section

NTP v. Research in Motion: Charting thePerimeter of United States Patent Law

By Henry C. Su

155301 8/30/05 9:11 AM Page 3


271(a) is the place at which the system asa whole is put into service, i.e., the placewhere control of the system is exercisedand beneficial use of the systemobtained.”26 Essentially, the rule states thatthe operative assembly of an infringingcombination does not have to be locatedentirely within the United States for thereto be infringement if the assembly is con-trolled and beneficially used by someonein the United States. The Court of Claimsin Decca held that although the accusedOmega navigation system involved theplacement of transmitting stations abroad(e.g., in Norway), the system as a wholewas controlled by a “master” station locat-ed in the United States and owned andoperated for the benefit of the UnitedStates government.27 Similarly, theFederal Circuit in NTP reasoned thatalthough the accused BlackBerry systemincluded the Relay component in Canada,the system as a whole was being con-trolled and used by customers located inthe United States who have purchasedBlackBerry handheld devices.28 RIM wastherefore liable for inducing or contribut-ing to its customers’ infringing use of theclaimed system.

With respect to NTP’s claimed method,however, the Federal Circuit reached theopposite conclusion. Using a patentedprocess “necessarily involves doing orperforming each of the steps recited” indi-vidually and separately, as contrasted withusing a patented system as a whole, withall of its constituent components on a col-lective basis.29 The court “therefore [held]that a process cannot be used ‘within’ theUnited States as required by Section271(a) unless each of the steps is per-formed within this country.”30 In this case,the location of the Relay component inCanada precluded a finding of directinfringement by RIM’s customers becauseeach of the asserted method claimsincluded a step that involved using theRelay as an “interface” or “interfaceswitch.”31 As a result, RIM could not beheld liable for induced or contributoryinfringement of the method claims, unlikethe system claims.32

The Federal Circuit next consideredwhether RIM nevertheless could be heldliable for direct infringement of NTP’smethod claims based on an “offer tosell/sell.” “[T]he ordinary meaning of asale includes the concept of a transfer of

title or property.”33 That definition worksfine when the patented invention is anarticle of manufacture or a machine towhich title and possession can be trans-ferred. But “[i]t is difficult to envisionwhat property is transferred merely by oneparty performing the steps of a methodclaim in exchange for payment by anotherparty. Moreover, performance of a methoddoes not necessarily require anything thatis capable of being transferred.”34 Moreimportantly for this case, “RIM’s perform-ance of at least some of the recited stepsof the asserted method claims as a servicefor its customers cannot be considered tobe selling or offering to sell the inventioncovered by the asserted method claims.”35

Nor can its sale of the handheld devicesalone be a sale of NTP’s claimed process.36

The court therefore held that RIM couldnot be liable under section 271(a) forinfringement of NTP’s method claims.37

Finally, the court also ruled out anytheory of infringement of NTP’s methodclaims based on either section 271(f) or271(g). In general terms, section 271(f)proscribes the acts of (1) supplying all ora substantial part of the components of apatented invention in or from the UnitedStates in order to induce their infringingcombination overseas and (2) supplyingany specially adapted, nonstaple compo-nent of a patented invention in order tocontribute to the creation of an infringingcombination overseas.38 The FederalCircuit ruled that section 271(f) did notapply because “[b]y merely supplyingproducts to its customers in the UnitedStates, RIM is not supplying or causing to

be supplied in this country any steps of apatented process invention for combina-tion outside the United States.”39

Section 271(g) in general proscribesthe act of using, offering to sell, or sell-ing within the United States or importinginto the United States a product that hasbeen made overseas using a processpatented in this country.40 The reason thissection does not apply is because there isno physical article being made by NTP’spatented method, as required by thestatute.41 “[T]he ‘transmission of infor-mation,’ like the ‘production of informa-tion,’ does not entail the manufacturingof a physical product[.]”42

As seen in the NTP court’s analysis, thenature of the infringing act may implicitlyrequire that the patented invention bepresent in the United States. For example,Deepsouth makes clear that to be infring-ing, an act of “making” or “selling” mustbe of the patented invention as a whole,not just its parts.43 Accordingly, thepatented invention may have to be whollypresent in the United States if it is to bedeemed to have been made or sold withinthe United States. By contrast, an “offer tosell” infringes if it occurs within theUnited States even if the patented inven-tion is not then present within its borders(although the invention must enter theUnited States contemporaneously with theintended sale).44

Of all the species of infringing acts, a“use” of a patented invention would seemto be the one that does not necessarily callfor the invention to be entirely presentwithin the United States. If the patentedinvention is a system or a method, it mat-ters not that certain components or stepsare located abroad. What matters is thatthere is a use of the system or method inthe United States that encroaches upon thepatentee’s exclusive right to the domesticmarket for the patented invention. TheFederal Circuit thus held in NTP that directinfringement of the asserted system claimsunder section 271(a) arose from the activi-ties of RIM customers in the United Statesusing their BlackBerry devices, even if theRelay happens to be in Canada.45

Possibility of Supreme CourtReviewAs of the writing of this article, the NTPcase remains pending in the FederalCircuit.46 RIM may well petition the courtagain for a rehearing en banc, or seek cer-

If the patented

invention is a system

or a method,

components or steps

may be located abroad.

155301 8/30/05 9:11 AM Page 4


tiorari from the Supreme Court to reviewthe Federal Circuit’s territoriality analysisunder the “use” prong of section 271(a).For all its clarity, the Court in Deepsouthnever answered this question,47 whichappears to be complex and not readilysusceptible to resolution in accordancewith bright-line rules.

At least one lower court has consideredthe converse of this question, i.e., whetherinfringement arises simply because apatented invention is located partly in theUnited States if it is used only outside ofthe United States. In Freedom Wireless,Inc. v. Boston Communications Group,Inc.,48 defendant Rogers Wireless, Inc.,which provides a prepaid wireless serviceexclusively to Canadian residents, arguedthat it did not “use” its accused prepaidwireless system within the United States.49

In response, plaintiff and patentee FreedomWireless focused on the fact that an essen-tial component of Rogers’s prepaid wirelesssystem, a billing database provided bydefendant Boston Communications Group,is located in Massachusetts.50

The district court rejected the notion thatthe incorporation of the Massachusetts-based billing database would transformRogers’s use of its prepaid wireless sys-tem, which it controlled and operatedfrom Canada, into an infringing use with-in the United States. “[T]his is a casewhere the defendant was a Canadian resi-dent operating a system exclusively forthe benefit of Canadian residents, the sub-stantial portion of which was locatedwithin Canada. In other words, this was aCanadian system that happened to extendinto the United States, not a domestic sys-tem that happened to extend into Canada.”51

The holding in Freedom Wireless is thusconsistent with the view that the territorial-ity analysis should focus on the location ofthe “use” as opposed to the location of thepatented invention. The fact that Rogersused its prepaid wireless system in Canadato serve exclusively Canadian customerswas dispositive of the infringement issue.

In summary, fairly read, section 271(a)focuses on whether an act of making,using, selling, or offering to sell a patent-ed invention takes place within the UnitedStates. The location of the patented inven-tion should be of consequence insofar asit informs or impacts the location of theallegedly infringing act. For example, apatented article such as a handheld device

must be present in the United States in orderfor it to be used. Even if section 271(a) doesnot appear to apply to any of the accusedactivities of a defendant, other subsectionsof the statute may. There may be a supplyin or from the United States of all or asubstantial portion of the components of apatented invention in violation of section271(f)(1), such as source code burned ontogolden master disks and shipped overseaswhere the code is then replicated andinstalled onto computer hard drives.52 Orthere may be an importation of a productmade abroad by a patented process in vio-lation of section 271(g). Finally, if section271 is not at all applicable, then a patenteeshould heed the advice in Deepsouth: Seekforeign patent protection.53 �

Henry C. Su is a partner at theMountain View, Calif., office of Fenwick &West LLP.

Endnotes1 35 U.S.C. § 271(a) (2005) (“Except as

otherwise provided in this title, whoever with-out authority makes, uses, offers to sell, orsells any patented invention, within the UnitedStates or imports into the United States anypatented invention during the term of thepatent therefor, infringes the patent.”).

2 Deepsouth Packing Co. v. Laitram Corp.,406 U.S. 518, 531 (1972).

3 Dowagiac Mfg. Co. v. Minn. Moline PlowCo., 235 U.S. 641, 650 (1915) (citation omitted).

4 Brown v. Duchesne, 60 U.S. (19 How.)183, 195 (1857).

5 Id.6 35 U.S.C. § 281 (2005) (“A patentee shall

have remedy by civil action for infringement ofhis patent.”).

7 No. 03-1615 (Fed. Cir. Aug. 2, 2005),available at http://fedcir.gov/opinions/03-1615r.pdf. This is a revised opinion thatresulted from the court’s granting a petition forpanel rehearing and withdrawing its previouslypublished opinion, 392 F.3d 1336 (Fed. Cir.2004). See NTP, No. 03-1615 (Fed. Cir. Aug. 2,2005) (order), available at http://fedcir.gov/opinions/03-1615o.pdf.

8 NTP’s patents are currently undergoingreexamination and the United States Patent andTrademark Office has already declared sevenof them invalid in view of newly identifiedprior art. See USPTO Again Rules forBlackBerry Maker in Patent Challenge, IP LAW

BULL. (June 23, 2005), available atwww.iplawbulletin.com.

9 The BlackBerry® Relay also serves as agateway for an e-mail message moving in thereverse direction, from a user’s handheld

device via the wireless network to the user’smail server, where the redirector softwareretrieves and places it in the user’s e-mail soft-ware for distribution via normal channels.

10 NTP, slip op. at 49-50.11 Id. at 50. There was originally an issue

whether the Relay was also located in Virginia,but this issue was not preserved for the appeal.See id. at 50 n.11.

12 Id. at 50-51.13 Id. at 51.14 Id. at 51. The Federal Circuit characterized

RIM’s argument under § 271(a) to be “that theentire accused system and method must be con-tained or conducted within the territorial boundsof the United States.” Id. at 51-52.

15 NTP, Inc. v. Research in Motion, Ltd.,392 F.3d 1336 (Fed. Cir. 2004).

16 No.03-1615 (Fed. Cir. Aug. 2, 2005)(order).

17 See, e.g., Combined Petition by Research inMotion, Ltd. for Panel Rehearing and RehearingEn Banc, NTP (No. 03-1615, filed Jan. 11,2005); Brief Amicus Curiae of the Governmentof Canada in Support of the Request forRehearing En Banc Made in the CombinedPetition by Research in Motion, Ltd. for PanelRehearing and Rehearing En Banc, NTP (No. 03-1615, filed Jan. 13, 2005); The CanadianChamber of Commerce’s Brief Amicus Curiae inSupport of Request for Rehearing En Banc, NTP(No. 03-1615, filed Jan. 14, 2005).

18 NTP, slip op. at 52.19 Id. at 52-53.20 Id. at 53.21 See footnote 2 supra.22 NTP, slip op. at 53. In Deepsouth, the

accused machines for deveining shrimp hadbeen exported as separate components forassembly and use abroad. 406 U.S. at 523-24.

23 210 Ct. Cl. 546, 544 F.2d 1070 (Ct. Cl.1976).

24 NTP, slip op. at 53-55.25 Id. at 55.26 Id. at 56. “Although Decca was decided

within the context of § 1498 [of Title 28],which raises questions of use by the UnitedStates, the question of use within the UnitedStates also was implicated because directinfringement under § 271(a) is a necessarypredicate for government liability under §1498.” Id. at 54-55 (acknowledging that Deccadealt with a takings claim against the govern-ment for the use or manufacture of a patentedinvention without just compensation).

27 Decca, 210 Ct. Cl. at 569, 544 F.2d at1083 (concluding that an infringement by theaccused Omega navigation system rests “onthe combination of circumstances here present,with particular emphasis on the ownership ofthe equipment by the United States, the controlof the equipment from the United States andon the actual beneficial use of the system with-

155301 8/30/05 9:11 AM Page 5


in the United States.”).28 NTP, slip op. at 56-57 (“When RIM’s

United States customers send and receivemessages by manipulating the handhelddevices in their possession in the UnitedStates, the location of the use of the commu-nication system as a whole occurs in theUnited States.”). Note that the customers, notRIM, are the direct infringers under this “use”analysis, and RIM’s liability must arise frominducing or contributing to such directinfringement. Id. at 56 n.13.

29 Id. at 58.30 Id. (emphasis added).31 Id.32 Id. at 59.33 Id. at 60.34 Id. at 61.35 Id. at 63.36 Id.37 The court added that RIM could not be

found to infringe the method claims under theimportation clause of § 271(a), based on thesame reasoning why the method claims couldnot be said to have been offered for sale orsold. Id. at 64.

38 35 U.S.C. § 271(f)(1) & (2) (2005).39 NTP, slip op. at 67.40 35 U.S.C. § 271(g) (2005).41 NTP, slip op. at 69.42 Id. at 69 (citing Bayer AG v. Housey

Pharms., Inc., 340 F.3d 1367, 1377 (Fed.

Cir. 2003)).43 406 U.S. at 528 (“We cannot endorse the

view that the ‘substantial manufacture of theconstituent parts of [a] machine’ constitutesdirect infringement when we have so oftenheld that a combination patent protects onlyagainst the operable assembly of the whole andnot the manufacture of its parts.”).

44 Rotec Indus., Inc. v. Mitsubishi Corp.,215 F.3d 1246, 1257 (Fed. Cir. 2000) (affirm-ing the judgment that there was insufficientevidence for a jury to have found an offer forsale to have been extended within the UnitedStates). Judge Newman points out in her con-currence, however, that as defined by § 271(i),an “offer for sale” made in the United Statescannot be infringing unless it ultimately resultsin a sale, during the term of the patent, of anitem that infringes the patent in the UnitedStates. Id. at 1260 (Newman, J., concurring)(“Thus an offer made in the United States, tosell a system all of whose components wouldbe made in foreign countries, for sale, installa-tion, and use in a foreign country, does notinfringe the United States patent.”).

45 NTP, slip op. at 57 (“This satisfactorilyestablishes that the situs of the ‘use’ of RIM’ssystem by RIM’s United States customers forpurposes of § 271(a) is the United States.”).

46 NTP and RIM previously announced a set-tlement of their dispute on March 16, 2005, butthat settlement now appears to have unraveled.

47 406 U.S. at 527 (“Laitram does not sug-gest that Deepsouth ‘uses’ the machines. Itsargument that Deepsouth sells the machines—based primarily on Deepsouth’s sales rhetoricand related indicia such as price—cannot carrythe day unless it can be shown that Deepsouthis selling the ‘patented invention.’ The salesquestion thus resolves itself into the questionof manufacture: did Deepsouth ‘make’ (andthen sell) something cognizable under thepatent law as the patented invention, or did it‘make’ (and then sell) something that fell shortof infringement?”) (footnote omitted).

48 198 F. Supp. 2d 11 (D. Mass. 2002).49 Id. at 15 (“In brief, Rogers argues that

this is a Canadian system operated by aCanadian corporation exclusively for Canadianresidents and is therefore beyond the scope ofthe patent infringement statute.”).

50 Id. at 15-16 (“Thus, the critical issue inthis motion for summary judgment is whetherRogers’s reliance on the BCGI database inMassachusetts can constitute use within theUnited States so as to satisfy the territorialityrequirement of 35 U.S.C. § 271(a).”).

51 Id. at 18.52 Eolas Techs. Inc v. Microsoft Corp., 399

F.3d 1325 (Fed. Cir. 2005); AT&T Corp. v.Microsoft Corp., No. 04-1285, 2005 U.S. App.LEXIS 14082 (Fed. Cir. July 13, 2005)

53 406 U.S. at 531. See Pellegrini v. AnalogDevices, Inc., 75 F.3d 1113 (Fed. Cir. 2004).

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When contemplating filing anintellectual property lawsuitinvolving imported products,

many lawyers think only of the federalcourts. Doing so, however, denies theirclients one of the most powerful optionsavailable: filing a complaint at the U.S.International Trade Commission (ITC)under section 337 of the Tariff Act, 19U.S.C. § 1337. With more than 100 casesduring the last five years, the ITC dockethas exploded, and with good reason.

Section 337Section 337 is a trade law prohibitingunfair competition in import trade. Whilebroadly written to cover any type of“unfair practice,” the statute expressly listsinfringement of U.S. patents, trademarks,copyrights, and mask works as violationsof the law. The statute authorizes the ITCto investigate claims by private partiesagainst imports alleged to infringe U.S.intellectual property and to exclude thoseimports from entry into the United States.In practice, the law is used almost exclu-sively as an intellectual property rightsenforcement tool rather than as a broaderunfair competition law. As such, the ITChas become an intellectual property lawforum of the first order.

Advantages of the ITCThere are a number of advantages to fil-ing with the ITC:

Broad jurisdiction. Jurisdiction underSection 337 is in rem, meaning that it isthe imported articles from which jurisdic-tion derives, not the presence of the par-ties or unfair acts in the vicinity of theITC (located in Washington, D.C.). In remjurisdiction allows the IP owner to addressinfringement in a single forum regardlessof whether the manufacturer is overseas or the distributors and importers are scat-tered across the United States

Broad remedies. The ITC can issue“general” or “limited” exclusion orders. Ifthe IP owner can prove a widespread pat-tern of violation and ease of market entry,the ITC can issue a general order exclud-ing all imported products regardless of

whether the IP owner named any givenmanufacturer or importer as a party. A gen-eral exclusion order enables an IP owner tostop infringing imports when not all thesources are known or when there are toomany sources as a practical matter to namein the lawsuit. Limited orders excludeinfringing articles manufactured by or onbehalf of the named defendants. Even lim-ited orders, however, may be broadly writ-ten to cover “upstream” products (e.g.,components) of the infringing good or“downstream” products (e.g., finishedgoods) containing the infringing article.The ITC also may issue cease and desistorders against ongoing U.S. activity (suchas sale from inventory) that is “reasonablyrelated” to the importation of the goods.

Unique enforcement tools. Unlike fed-eral court orders, which are policed by thecourt via contempt actions brought by theright holder, ITC exclusion orders areautomatically enforced by U.S. Customsand Border Protection at all U.S. ports ofentry. Customs, on the ITC’s behalf, isauthorized to seize and exact forfeiture ofthe goods. For cease and desist order vio-lations, the ITC can impose penalties rep-resenting the greater of $100,000 for eachday of violation or two times the value ofthe imported articles.

No counterclaim authority. The ITCcannot hear counterclaims. Any counter-claim must be removed to a U.S. districtcourt that would have jurisdiction.Therefore, counterclaims cannot take upvaluable hearing time or distract from thecore infringement issues.

Predictable time to final judgment.Target dates for case completion are set atthe beginning of each case and are almostalways set for 15 months or less. They arerarely altered to any significant degree.

Disadvantages of the ITCAdvantages of filing with the ITC must bebalanced against disadvantages:

Importation requirement. Section 337operates only against imported goods.However, this barrier is minimal. A single importation is sufficient. Non-commercial importations (such as for

trade shows or research) also suffice.Importation that is merely “incipient,”such as goods under a contract for sale,also may be preemptively barred.

Domestic industry requirement. Section337 requires that a domestic industry inarticles protected by the IP right exist orbe in the process of being established. Anindustry may be based on investment inplant or equipment, employment of laboror capital, or investment in engineering,research and development, or licensing.The U.S. investment or activity must bedirected in some way to using or exploit-ing the particular IP right. However, thereis no requirement of investment of a cer-tain size, and companies with as few asfive employees have satisfied the test.There is also no U.S. citizenship require-ment. The owner of the U.S. IP right maybe a citizen of any country, as long asthere is U.S. investment or activity of theenumerated types related to the IP right.

No damages. If you want damages,you must sue in federal court. But bring-ing a case at the ITC does not prevent thefiling of parallel litigation in federalcourt. The cases can proceed simultane-ously (though the federal case may besubject to stay). And the ITC case willnot have res judicata or collateral estop-pel effect in the federal case, though itmay have persuasive power.

A detailed complaint. Unlike federalcourt, the ITC requires detailed factualallegations for each element of the claim.While somewhat burdensome, the prefil-ing investigation required to meet thispleading standard often provides a bigpreparation advantage for the complainant.

Considering the ITCYou may want to consider using the ITC ifany of the following apply:

Imports are directly hurting your busi-ness. If your problem is with imports, theITC’s broad remedies and unique enforce-ment tools make the forum very attractive.

Your competitor’s business depends onimporting product into the United States.

Using the Tariff Act’s Section 337 in IP BorderEnforcement

By Bryan Schwartz


155301 8/30/05 9:11 AM Page 7

Deciding how to globally protect acommercially valuable processdoes not have to be cumbersome.

There are several alternative routes avail-able, some are more beneficial than oth-ers, depending on: the ability to materiallyalter the end product without underminingits commercial value in the United States;the form of the product (tangible or intan-gible); and the trade secret laws of thecountry in which the process may becomesubject to misappropriation.

Consider the following course ofevents. You are a manufacturer of a prod-uct—be it pharmaceutical drugs, electron-ic equipment, or automobiles—with asubstantial market in the United States.For a number of reasons it is considerablyless expensive to manufacture your prod-uct abroad, rather than locally, and thenimport your product. So you set up shopin China, hire employees and form severalbusiness relationships with local organiza-tions to assist you in the development ofyour product. Though you are uncertain asto whether your process is unique to yourorganization, you wish to keep yourknow-how inside the company for as longas possible. You may, however, be interest-

ed in eventually licensing the technology.Rightfully so, you consider what would be the best avenue for protecting yourintellectual property.

On the one hand, if your process isnovel (and, of course, useful) you canfile a patent application in the UnitedStates.1 However, you are aware that theapplication for patent will be available tothe public 18 months after filing.2 On theother hand, you may elect to fortify thesecrecy value of your process by takingthe measures necessary to establish yourprocess as a trade secret within theregion of interest. Those benefiting fromthe unauthorized acquisition of yourinformation would then be liable fortrade secret misappropriation.3

The route you choose should be deter-mined by the aforementioned considera-tions in light of relevant global intellectualproperty laws as summarized below.

Imported Goods “Made By” aPatented ProcessOne of the privileges provided to a U.S. patent holder is the ability to pursueadequate remedy against infringers of apatented invention.4 The definition ofinfringement has been broadened toinclude the importation of products madeby a patented process so that “whoeverwithout authority imports into the UnitedStates or offers to sell, sells, or uses with-in the Unites States a product which ismade by a process patented in the UnitedStates shall be liable as an infringer—”5

The statute outlines an exception to therule: A product is not considered “madeby” the patented process if it is materiallychanged by subsequent processes.6 Whilemost patent holders are concerned primar-ily with whether an imported productimpairs the economic value of theirpatented process, the Federal Circuitrefuses to use impairment of economicvalue as the standard for assessing thesubstantiality of the change in question.Eli Lilly & Co. v. American CyanamidCo., 82 F.3d 1568 (Fed. Cir. 1996). In Eli

Lilly, the patent holder had a processpatent on making a compound that was anintermediate compound of an antibioticimported into the U.S. by the accusedinfringer. The court concentrated on thestructural differences of the two products,each structural difference’s impact on theproduct’s properties, and the additionalmanufacturing processes necessary to cre-ate the change in the product.7 The courtreasoned that a “value-based construction”would require the statutory language to“do too much work,” allowing the issue ofinfringement hinge upon the variablecommercial uses of a product instead ofits structure and/or function.

“Under [the value-based] approach,however, the question whether compound6 was ‘materially changed’ in the courseof its conversion to cefaclor would dependon whether and to what extent other deriv-ative products of compound 6 are mar-keted in this country. Thus under, [thevalue-based] theory compound 6 wouldbecome materially different from cefaclorif and when compound 6 came to haveother commercial uses in the UnitedStates, even though the respective struc-tures and properties of the two com-pounds remained unchanged.”8

Companies seeking to preserve theeconomic integrity of their process patentsshould understand this distinction.

Another doctrinal exception magnifiesthe subtle difference between “made by”and discovered or developed by asdetailed in recent case law. If the productof the process is intangible and merelydeveloped by a patented process then theimporter will not be liable for infringe-ment for importing products benefitingfrom the patented process. Bayer AG v.Housey Pharmaceuticals, Inc., 340 F.3d1367 (Fed. Cir. 2003). In Bayer, the courtdenied a request for a preliminary injunc-tion made by Housey Pharmaceuticalswhere the alleged infringer took advan-tage of a patented screening process toidentify substances with pharmaceuticalpotential. Bayer manufactured the prod-


Trade Secret Law and Protecting Your Client’s Process

By Kristy Joi Downing

A product is not

considered “made by”

the patented

process if it is

materially changed by

subsequent processes.

155301 8/30/05 9:11 AM Page 8


uct—discovered by Housey’s patentedscreening process—and imported it intothe United States. The court relied on the legislative intent of Congress asexpressed through the ordinary meaningof the word “made.” Relying onWebster’s and Random House Dictionarydefinitions of “made” the court found“[t]hese definitions—consistent in refer-ring to tangible objects and not intangiblessuch as information. Thus, the productionof information is not within the scope ofa process of ‘manufacture.’”9 Global corporations should also be aware that § 271(g) does not protect against theimportation of intangible productsderived from a patented process.

Comparative Study of Trade Secret LawsA completely different ball game, tradesecret law does not recognize the “madeby” limitation that is addressed above.Rather, trade secret law seeks to provide aremedy to the owner of commerciallyvaluable know-how or information thathas been inappropriately acquired. Theelements necessary to establish tradesecret misappropriation vary betweencountries. However, there are several uni-versal considerations worth recognizing.

First, secrecy: The information mustnot be available in the public domain orreadily ascertainable. Second, value: Theknow-how must have some economicvalue or provide a commercial advantage.Last, security: The holder of the informa-tion must make reasonable efforts tosecure the information. Most countriesprovide monetary relief as well as someform of injunctive relief to successfultrade secret misappropriation claimants.However, some countries impose criminalsanctions as a primary means of grantingrelief that is sometimes a less attractiveoption than civil remedies.

United States. Predominantly, theUnited States has codified its trade secretlaw. The Uniform Trade Secrets Act(UTSA) has been adopted by the majorityof states including the District ofColumbia.10 The elements of a tradesecrets misappropriation claim underUTSA are in line with the universal con-siderations enumerated above (secrecy,value and security). Under UTSA a tradesecret is defined as

[I]nformation, including a formula, pat-tern, compilation, program, device,method, technique, or process, that: (i)

derives independent economic value,actual or potential, from not being gen-erally known to, and not being readilyascertainable by proper means by, otherpersons who can obtain economic valuefrom its disclosure or use, and (ii) isthe subject of efforts that are reason-able under the circumstances to main-tain its secrecy.11

Under the UTSA injunctive relief as well as monetary relief are available.12

UTSA, however, has not adopted crimi-nal sanctions.13

Canada. Canadian trade secret law isestablished in Canada’s common law andcorresponds with U.S. law in that thesame proverbial considerations need beestablished for a successful trade secretmisappropriations claim. Fraser v. ThamesTelevision Ltd.,[1984] Q.B. 44. In Fraserv. Thames Television, the tribunal con-firmed that information might be definedas confidential without a contractual obli-gation given: “(1) that the informationwas of confidential nature; (2) that theinformation was communicated in circum-stances importing an obligation of confi-dence; and (3) that there has been anunauthorized use of the information to thedetriment of the person communicating it(i.e. the plaintiff).”14 Moreover, Canadarequires that the trade secret holder have a reasonable belief that the information isof commercial value.15 Canada providescivil remedies (monetary and equitable,such as injunctions).

Mexico. Mexico has also codified itstrade secret provisions. Mexico’s source oftrade secret law, the Industrial PropertyLaw of the United Mexican States (IPL),details a narrower definition of a tradesecret than its NAFTA brothers. The IPLdefines a trade secret as:

Any information susceptible of industri-al application that a natural person orcorporate entity keeps, [that] is of confi-dential character and is associated withsecuring or retaining a competitive eco-nomic advantage over third parties inthe conduct of economic activities, andregarding which the said person or enti-ty has adopted sufficient means or sys-tems of preserving confidentiality andrestricting access, shall be considered atrade secret.16

In addition to the secrecy, value, andsecurity elements the accuser must alsoestablish that the trade secret was actuallyused and that the information was in tangi-ble form at the time of misappropriation.Though Mexican law provides monetary

remedies, the preferred route of enforce-ment is through criminal sanctions. Mexicodoes have provisions for injunctive relief.

Japan. Japan amended its laws in 1991to provide direct statutory protection oftrade secrets. The elements of a tradesecrets misappropriation claim underJapan’s Unfair Competition PreventionLaw are in line with the universal consid-erations (secrecy, value and security)defining a trade secret as “technical orbusiness information—useful in commer-cial activities, such as manufacturing ormarketing methods, which is kept secretand not publicly known.”17 Additionally,the objective of secrecy must be adminis-tered by the holder. Moreover, Japan pro-vides civil remedies including injunctiverelief and monetary damages. However,no criminal sanctions are available underthis statute.

China. Chinese trade secret law isstatutorily defined in China’s UnfairCompetition Law (UCL).18 Chinese tradesecret law also focuses on the surroundingcircumstances as they relate to secrecy,value and security. Article 10 defines atrade (or “business”) secret as “technicalinformation and business informationwhich is non-public, can bring economicbenefits to the party that has rights thereinand is practical, and for which the partythat has rights therein has adopted meas-ures to maintain its confidentiality.”19

China provides civil remedies includingmonetary and equitable remedies (e.g.,cease orders). China also recognizes thirdparty liability.

Choosing According to Your GoalsThe choice to pursue patent protection ver-sus trade secret protection should be con-tingent upon the process that one seeks toprevent others from copying and the coun-try in which the process occurs. If theprocess does not directly add value to aproduct, i.e., regarding the manufacture ofthe product, then seeking a process patentmay not be the best means of preventingcompetitors from importing products thatbenefit from that process. Likewise, if theproduct produced by the process can easilybe materially altered and retain its marketvalue then § 271(g) may fail to adequatelyprotect the information.

Overseas operations in countries likeCanada, Japan, and China will have strongoverlap with typical U.S. trade secret laws.However, if your operations are in coun-

155301 8/30/05 9:11 AM Page 9


tries like Mexico, additional measuresshould be taken to fortify your informa-tion as a trade secret. Lastly, if criminalsanctions play a poor second fiddle tocivil remedies for your operations, thenfiling a patent application may be moredesirable than seeking trade secret protection in countries like Mexico.

The trade secret laws of the country inwhich a process may become subject tomisappropriation are relevant to the deci-sion on how to protect a commerciallyvaluable process. The form of the prod-uct (tangible or intangible) and the easeof one’s ability to materially alter theproduct without undermining its com-mercial value in the United States arenoteworthy considerations. �

Kristy Joi Downing is an associate in the Milwaukee office of Foley &Lardner LLP.

Endnotes1 35 U.S.C. § 101 (2003) (“Whoever invents

or discovers any new and useful process,machine, manufacture, or composition of mat-ter, or any new and useful improvement there-of, may obtain a patent therefor —”).

2 35 U.S.C. § 122(b) (2003) (“[Notwith-standing the listed exceptions], each applicationfor a patent shall be published, in accordancewith procedures determined by the Director,promptly after the expiration of a period of 18

months from the earliest filing date for which abenefit is sought under this title.”).

3 Filing an application under the PatentCooperation Treaty with designation in thedesired country may also be another optiondepending on the country’s recognition of yourparticular type of process patent. See M.P.E.P.§ 1800. Moreover, other theories of recoverymay be available such as breach of contract orunjust enrichment.

4 35 U.S.C. § 271 (2003).5 35 U.S.C. § 271(g) (2003) (emphasis

added); Process Patent Amendments Act of1988, Pub. L. No. 100-418, §§ 9001- 9007.

6 Id.7 Id. at 1570-71; see also id. at 1573-74.8 Id. at 1573-74.9 Id. at 1371-72.10 National Conference of Commissioners on

Uniform State Laws (1979) (amended 1985).11 Id. at § 1(4).12 Id. at § 2.13 Other states may have varying considera-

tion in making the determination as to what is trade secret that are reflected in theRestatements for Torts and Unfair Competition.RESTATEMENT (FIRST) OF TORTS §757 (1939);RESTATEMENT (THIRD) OF UNFAIR COMPETITION

LAW § 39 (1995).14 Id. at 61 quoting Coco v. A.N. Clark

(Engineers) Ltd. [1969] R.P.C. 41, 47-48.15 Id. at 65 (“First, I think that the informa-

tion must be information the release of whichthe owner believes would be injurious to himor of advantage to his rivals or others. Second,I think the owner must believe that the infor-

mation is confidential or secret, i.e., that it isnot already in the public domain. It may bethat some or all of his rivals already have theinformation; but as long as the owner believesit to be confidential I think he is entitled totry and protect it. Third, I think that theowner’s belief under the two previous headsmust be reasonable. Fourth, I think that theinformation must be judged in light of theusage and practices of the particular industryor trade concerned”).

16 “Ley de Fomento y Proteccion de laPropeidad Industrial” [Law for theDevelopment and Protection of IndustrialProperty], D.O., 28 de junio de 1991 (Mex.),translated in WORLDWIDE TRADE SECRETS LAW,3-6 (2003).

17 Fusei Kyoso Boshi Ho [UnfairCompetition Law], Law No. 14 (1943),Amendments, Law No. 66 (1990) Art 1(Japan), translated in Holly Svetz, Japan’s NewTrade Secret Law, 26 Geo. Wash. J. Int’l L. &Econ. 426 (1992).

18 Unfair Competition Prevention Law,translated in WORLDWIDE TRADE SECRETS LAW,26-7 (2003).

19 Id. at paragraph 3 of Article 10; see alsoArticle 2 of the Trade Secrets Regulations,translated in WORLDWIDE TRADE SECRETS LAW,26-8 (2003) (defining a trade secret as “techni-cal information and business informationwhich is non-public, can bring economic bene-fits to the party that has rights therein and ispractical, and for which the party that hasrights therein has adopted measures to main-tain its confidentiality.”).

In this situation, an IP owner can dramat-ically increase his or her leverage by fil-ing at the ITC. The statute prohibits saleafter importation, not just the act ofimportation, so distributors may beimpacted. And domestic competitors arenot exempt. Section 337 cases areincreasingly being fought between solelydomestic companies. Even if a product ismade in the United States, if it is laterimported either alone or in a secondaryproduct, it may be excluded.

There are multiple infringers. If effec-tive relief would require suits in multiplecourts, the ITC may be the best forum.Strong evidentiary sanctions and default

Using the Tariff Act’sSection 337 in IP BorderEnforcementContinued from pg 7

provisions are available against parties thatfail to produce documents or fail to appear.

Time is of the essence. ITC proceed-ings are quick. In most district courts, IPcases typically take much longer than 15months. ITC discovery begins 30 daysafter the case is filed. Response time isoften as little as 10 days, not the 30 daysallowed under the federal rules.

Defending Against Section 337 ActionsBecause there is no exemption for U.S.citizens, U.S. companies that import prod-ucts into the country are just as likely tobe sued under section 337 as are foreigncompanies. What should you do if you areon the other end of a section 337 case?

As to substantive law, section 337specifically provides for all legal andequitable defenses available under federallaw. Therefore, the best strategy usuallywill be to pursue immediately the typical

defenses to the alleged IP infringement.From a procedural standpoint, the key isspeed. Retain counsel and experts as rap-idly as possible and promptly begin coor-dinating document and witness searches.Getting up to speed quickly can make thedifference in an outcome that is onlymonths down the road.

Although the ITC cannot award dam-ages, its arsenal of powerful remedies,coupled with its jurisdiction directly overthe goods, make it a forum that should beconsidered in all potential IP litigationinvolving imported goods. �

Bryan Schwartz is an attorney in theIntellectual Property Group for theCleveland law firm of Calfee, Halter &Griswold LLP. He has participated in morethan one dozen section 337 investigationsand is a frequent author and presenter inthe field.

155301 8/30/05 9:11 AM Page 10


U.S. Tariff Act of 1930 (19 U.S.C. §1337) authorizes remedies for unfairimport practices other than those relatedto pricing or import volume. Most sec-tion 337 complaints are based on allegedviolations of intellectual property rights,particularly patent infringement, and to alesser extent trade dress violations.

Section 337 cases are decided by thefull ITC (there are six commissioners).The cases are initially tried before admin-istrative law judges (ALJs), who hear thecase very much as would a district courtjudge and issue an Initial Determination.The ITC commissioners then review theInitial Determination and issue a finalITC decision.

Jurisdiction before the ITC is in rem,based on the import of the accused good.Accordingly, there are generally no per-sonal jurisdiction or venue issues at theITC. The ITC does not have authority toissue damages. Rather, the ITC may issuean exclusion order, directing customs tobar all further imports of the infringinggood. It may issue a limited exclusionorder, affecting only certain named com-panies, or a general exclusion order that iseffective against imports from anywherein the world regardless of whether themanufacturers or importers were partiesbefore the ITC. The ITC may also issuecease and desist orders, directingimporters to stop selling and return ordestroy all inventories of the good in theUnited States.

Section 337 investigations involve afull range of products. Cases in the lastyear have involved, for example, opticalcommunications equipment, color televi-sions, network controllers, DVD players,personal computers, flash memory cards,point-of-sale terminals, electric robots,rubber antidegradants, foam maskingtape, pool cues, automotive fuel caps, inkmarkers, and plastic food containers.Many section 337 cases have been filedagainst Asian countries, but cases involv-ing Canada and European countries arealso common.1

Section 337 cases more commonly goto trial than do district court IP infringe-ment cases. Of the 161 investigations

instituted during the years 1995 through2004, 46 percent were resolved by consent order (generally in which therespondent agreed to withdraw from theU.S. market) or settlement, 11 percentwere withdrawn, and 43 percent went tohearing and resulted in a finding of vio-lation (24 percent) or a finding of no vio-lation (19 percent).

Finally and perhaps most importantlyfor present purposes, section 337 investi-gations are expedited proceedings. Trial isalmost always conducted within seven tonine months of the case’s initiation, andthe ITC issues a final determination with-in 12 to 15 months.2

Rocket DocketsAs is well known, certain district courts inthe United States have adopted rules andprocedures to ensure that their cases aretried as quickly as possible. They have, forthat reason, come to be known as “rocketdockets.” The best known among patentlawyers are the Eastern District ofVirginia; the Eastern District of Texas, in Marshall; and the Western District ofWisconsin. For example, the averagetime from filing to trial (in all civilcases) in the Eastern District of Virginiaand the Western District of Wisconsinhas averaged between eight and ninemonths during the last two years. Thatcompares to the national average time totrial in civil cases of about 22 months.(Source: Administrative Office of theUnited States Courts)

The average time to trial for the mostcommon other venues for patent infringe-ment cases ranges from 20 months tothree years or even more. The averagetimes from filing to trial in all civil casesfor selected courts are as follows:

Times to trial in patent cases are gener-ally even longer, as indicated by the dif-ference between the time to trial for patentcases nationally (27.7 months) and thetime to trial for all civil cases nationally(22.5 months) in 2003.

In addition, some judges take a consider-able amount of time post trial to issue adecision, especially in patent cases, althoughthe rocket docket judges are usually goodabout turning around a decision promptly.

Preliminary InjunctionsDistrict courts may, of course, issue pre-liminary injunctions or, in principle inextreme situations, temporary restrainingorders, although the latter are rarely grantedin IP cases.

However, the data suggest that it maytake as long to resolve a motion for pre-liminary injunction as to try the case in arocket docket or at the ITC. Of the 51cases we have identified in which prelimi-nary injunctions were entered in patentcases from January 1994 throughDecember 2003, the mean time betweenfiling and preliminary relief was 275 days,or a bit over nine months. (The shortesttime between filing and injunction was 24days; the longest was 1,671 days. Withthose two extremes out of the sample, themean becomes a little over eight months.)For those cases in which preliminaryinjunctive relief was denied, the mean timebetween filing and denial of preliminaryrelief was 335 days, or about 11 months.

Benefits and Disadvantages ofSeeking a Preliminary InjunctionAlthough enforcement of a preliminaryinjunction can occasionally be problemat-ic, a preliminary injunction is normally astrong, satisfactory remedy. The question

Quick IP ReliefContinued from cover

*For 4-yr. period ending September 30, 2003 (in months)(Source: Administrative Office of the United States Courts, 2003 Federal CourtManagement Statistics)

District Court Average Time from Average Time from 2003 U.S.File-to-Trial* File-to-Trial* Rank

E.D. Virginia 8.0 9.0 1W.D. Wisconsin 8.4 7.5 2E.D. Texas 17.0 14.0 13D. Delaware 24.0 22.5 54N.D. Illinois 26.0 26.0 62C.D. California 21.2 20.0 36S.D. California 23.5 21.0 51Nat’l Average 22.5 21.8

155301 8/30/05 9:11 AM Page 11


is: Can you obtain one? The potentialproblems in seeking a preliminaryinjunction are:

• Can the plaintiff demonstrateirreparable harm? The simple loss ofmoney will not justify a preliminaryinjunction. The plaintiff must demon-strate irreparable harm to the compa-ny or perhaps to the market for itsproduct—something that cannot beremedied by damages. This is notalways an easy task.

• Does the plaintiff have possible juris-dictional problems? Jurisdiction canbe problematic in IP infringementcases, especially if there are multipledefendants or if the producer(s) of thegoods are not subject to U.S. jurisdic-tion. Thus, jurisdictional considera-tions may preclude use of a rocketdocket and may even preclude bring-ing the action in the United States atall. Even if jurisdiction is eventuallyestablished, it may not be in plaintiff ’spreferred forum, and the jurisdiction-al dispute can substantially delay res-olution on the merits.

Consider, for example, the not unusualcase of a foreign producer with little or noU.S. contacts and a large number of U.S.importers and users. The importers andusers may not be subject to suit in a sin-gle jurisdiction and may not be worthsuits in multiple jurisdictions. Or the IPowner may not want to sue consumersand potential customers. None of thoseconcerns apply in a section 337 casewhere the action will lie against theproduct. The accused manufacturer willgenerally participate in a section 337investigation, although defaults are notuncommon, but jurisdiction does notdepend on their participation oramenability to U.S. jurisdiction, or thatof any of the importers or users.

• Will limited discovery be sufficient?Discovery is typically limited in thepreliminary injunction phase in a dis-trict court. That may be an advantagein helping to reduce costs, but mayprevent fully exploring some issues.

• How important is the negative impactof a possible denial? There is a psy-chological downside, and possibly amore tangible downside, to losing amotion for a preliminary injunction.The judge may become entrenched orat least view plaintiff ’s case more

skeptically after the loss. Perhapseven more important, business per-sonnel (the client—remember them?)are often highly averse to the risk of aloss, even if temporary. It may resultin unfavorable publicity, loss of sales,concern from customers, questionsand second-guessing from top man-agement, and so forth.

• Can plaintiffs get a preliminaryinjunction at all? The courts appear tobe increasingly reluctant to grant pre-liminary injunctions. Our review ofpreliminary injunction decisions inpatent cases indicates that the numberof preliminary injunctions grantedhas fallen significantly since the1980s, even though the number ofpatent cases has somewhat increased.3

In 1994 to 1999, district courts grant-ed only one-third (25 of 75) of allpreliminary injunction applications.4

And a more recent review suggeststhat the rate has dropped to no betterthan about one-quarter of the casessince then. In addition, our surveyindicates that during the past decade,the Federal Circuit has overturned orreversed far more preliminary injunc-tions than it has upheld.

These results are consistent with what

can only be described as a less thanfriendly attitude toward preliminaryinjunctions on the part of the FederalCircuit. It has held that “a preliminaryinjunction is a drastic and extraordinaryremedy that is not to be routinely granted.”5

Moreover, although a patent is presumedto be valid for purposes of preliminaryrelief, the showing of possible invalidityneeded to avoid a preliminary injunctionis “notably” less than the clear and con-vincing showing necessary to establishinvalidity at full trial.6 To succeed on apreliminary injunction, the plaintiff “mustpresent a ‘clear case’ supporting the valid-ity of the patent.” The motion for prelimi-nary injunction can be defeated “by show-ing that the patent is ‘vulnerable’ to attackbased on validity.”7

That trend may have changed some-what during the past few years, primarilybecause the Federal Circuit appears to begiving greater deference to district courtclaim constructions in the context of pre-liminary injunctions, treating the trialcourt’s initial claim construction as pre-liminary and therefore subjecting it to lessintense scrutiny.8 However, some of thebenefits of a quick resolution are lost tothe extent that claim construction at thepreliminary injunction stage is only tenta-tive and may later be changed.

Benefits and Disadvantages of aRocket DocketRocket dockets can offer important advan-tages over preliminary injunctions and theITC. Among others, a rocket docket canaward damages, which the ITC cannot do.Many of the rocket docket judges haveconsiderable experience with patent casesand their management. Also very impor-tantly, juries are available in a rocketdocket but not at the ITC or on prelimi-nary injunction. Many practitioners preferto take cases to a jury if they are con-cerned about weaknesses in their case. Asdiscussed below, ITC cases are triedbefore experienced, capable ALJs who aremore likely to understand and be willingto rule against weaknesses.

Against those advantages there are sev-eral potential disadvantages. Most impor-tantly, it may simply not be possible toobtain or retain jurisdiction in a rocketdocket. In the 1990s, the Eastern District ofVirginia was generally open to taking patentcases given even relatively minimal contactswith the venue. However, it now often

The number of

preliminary injunctions

granted has fallen

significantly since

the 1980s, even

though the number

of patent cases

has increased.

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transfers out or dismisses the case if itbelieves that there is another court with asignificantly closer nexus to the matter. Inaddition, patent cases in the Eastern Districtof Virginia’s rocket docket used to be heardalmost exclusively in the court’s AlexandriaDivision. But patent cases are now assignedin rotation to judges in the Norfolk,Richmond, and Newport News Divisions,as well as the Alexandria Division.

The Western District of Wisconsin,Eastern District of Texas, and other rocketdockets do not appear to be transferringcases away quite as aggressively, but thereis still a significant risk of transfer absenta strong basis for staying in the district.Moreover, they offer a limited jurisdic-tional reach in most cases and may be oflimited convenience in many cases. Thus,a rocket docket may not always be avail-able or desirable.

Benefits and Disadvantages of the ITCThe number of section 337 cases has dou-bled from about 12 a year in 1999-2000 toan average of 20 or more from 2001 to thepresent.9 Why the apparent increasedattractiveness of the ITC? There are anumber of benefits to adjudication at theITC. They include:

• Speed and certainty of schedule(completion within 12 to 15 monthsis almost certain)

• No jurisdictional difficulties (in remproceedings, which allow petitionersto effectively reach foreign respon-dents and join multiple respondents inone proceeding)

• Experienced, capable adjudicators (fouradministrative law judges who hearnothing but intellectual property cases)

• Certain, strong remedy (U.S. Customsexcludes all imports of the infringingproduct; cease and desist orders canreach existing U.S. inventory andactivity; as noted earlier, the ITC mayeven issue general exclusion ordersthat are effective against imports fromanywhere in the world regardless ofwhether the manufacturers orimporters were parties before the ITC)

• Efficient, broad discovery, includingeffective foreign discovery

• There are effectively no counter-claims at the ITC (they can be filedbut are immediately removed to dis-trict court)

• The ITC tends to be upheld onappeal. Our survey indicates that theITC was upheld in 22 of 35 appealsfrom 1990 to date, was reversed inpart in six cases, was reversed inwhole in only four cases (none on apatent-based issue), and three caseswere dismissed (for a defectiveappeal or settlement). Only one of theITC’s claim constructions during thatperiod appears to have been reversed.The ITC’s favorable appellate recordmay result in part from the substantialevidence standard of review applica-ble to its factual determinations andin part from the experience and spe-cialization of the ITC ALJs.

• Section 271(g) (providing a defensein district court against infringementcases involving goods made overseasusing a process patented in the UnitedStates if the items are materiallychanged before importation or areimported as trivial and nonessentialcomponents of another product) is nota defense at the ITC.

• There are no juries at the ITC, whichmay be an advantage in cases withcomplex technology or issues.

Other factors may also have con-tributed to the increased use of section337. Perhaps most important are the risein import-related IP cases and theincreased use of section 337 by foreigncompanies as petitioners. For example,cases in recent years have been filed bysuch companies as BenQ Corporation,Mosel Vitelic Inc., Nikon Corporation,Toshiba Corporation, UMC, and YamahaMotor Company. Other factors mayinclude the apparent success of the 1994amendments to bring section 337 intocompliance with the GATT (the predeces-sor to the World Trade OrganizationAgreement) and the relaxation during thelast decade or so of the domestic industrystandard, discussed below.

There are some important potential dis-advantages of adjudication at the ITC.Most importantly, there are two thresholdrequirements to bringing a case at theITC. First, the infringing products must beimported. Second, consistent with itsnature as a “trade remedy,” the petitionerin a section 337 case must demonstrate acertain amount of economic activity with-in the United States related to the patentor other IP at issue. This so-called

“domestic industry” requirement can besatisfied by a relatively small amount ofdomestic economic activity, includingalmost any activity other than marketingand sales. For example, one or more ofR&D, engineering, licensing, manufactur-ing, repair and service, and quality con-trol, conducted in the United States, maysupport a finding of a domestic industry.

In addition, as discussed, the ITC cannotaward damages and does not have juries.

Getting the Best of Both WorldsIt may be possible to get much of the bestof both worlds by filing parallel litigationat the ITC and in district court. Therespondent will have the statutory right tostay the district court proceeding to theextent that it involves the same patents(and the judge will likely exercise his orher discretion to stay the district courtproceeding with respect to other patents)pending completion of the ITC investiga-tion. And the ITC decision is not formallybinding on the district court in patentcases (although it is in cases involvingother forms of IP). However, the fullrecord from the ITC may be entered intoevidence in the district court. The courtstend to defer to the detailed determina-tions of the ITC (and its experiencedALJs). And if there is an appeal, it is like-ly to have been decided by the FederalCircuit almost as quickly, if not even morequickly, than the district court would taketo conduct its trial and issue a decision.Thus, the ITC can function as a “shortcut”to get to the Federal Circuit.

Such parallel litigation typically allowsa complainant that has been successful atthe ITC to obtain damages quickly andwithout extensive further litigation. Infact, most respondents, when faced with adistrict court case following an ITC lossupheld at the Federal Circuit, settle onterms favorable to the complainant ratherthan litigate a likely second loss at the district court.

Concluding ThoughtsA motion for a preliminary injunction isworth serious consideration for partiesthat can make a strong showing of clearirreparable harm. Otherwise, the disad-vantages of a motion for preliminaryinjunction may be significant. If available,a rocket docket can be a very powerfultool, but jurisdictional and venue ques-tions often preclude that option. For IPowners with some U.S. economic activity

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CBP itself is not required for the seizureof goods, it increases the likelihood thatthe CBP will actively monitor shipmentsand prevent the importation of counterfeitor infringing products bearing a recordedmark. Practitioners should note that if aregistered trademark has not been record-ed with the CBP, an infringing item maynot be detained or seized. Thus, practi-tioners would be well advised to recordvital marks to a client’s business to ensuremore reliable protection at the border(currently, there are more than 25,000recorded copyrights and trademarks withthe CBP).

Trademark owners may record theirrights by using the CBP’s TrademarkRecordation Application Template locatedat www.cbp.gov. Recordations are kept in a searchable database called theIntellectual Property Rights Search(IPRS), which is updated nightly. A recor-dation with the CBP will be effective onthe date that the application is approved,and the recordation remains in force con-currently with the 20-year (or, in somecases, 10-year) registration period of theUSPTO registration. Renewals of customsrecordations must be submitted no later

than three months after the expiration ofthe 20-year trademark registration issuedby the USPTO.

The CBP also protects trade namesthat are not registered with the USPTO.Trade names may be recorded with theCBP (typically recorded as the completebusiness name unless it is demonstratedthat only part of the name is customarilyused) after the trade name has been usedfor at least six months to identify thebusiness. See 19 C.F.R. §§ 133.11–133.15(however, words or designs used as trade-marks will not be accepted for recorda-tion as a trade name).

Types of Infringing ActivityStopped at the BorderThe CBP recognizes three levels of trade-mark infringement: (1) counterfeit, (2)confusingly similar, and (3) gray market(parallel imports). For requestingenforcement actions, it is important tocharacterize the offense as one of thesethree types. If items are detained by theCBP, within 30 days of seizure, the trade-mark owner will be given information onthe date of importation, date of entry,description of merchandise, quantity, andcountry of origin (additional information,such as manufacturer name and addressand exporter and importer name andaddress, will also be provided if the articleis a counterfeit good).

In urgent cases involving imminentimportation of infringing products, practi-

tioners should immediately alert the portdirector for the suspected port of entry ofthe infringing goods. Contact numbers forport directors and other Customs officialsat port of entry offices and other helpfulinformation can be found at www.cbp.gov.

The three levels of infringement can beunderstood as follows:

Counterfeit Marks. A “spurious trade-mark that is identical to, or substantiallyindistinguishable from” a registered markis a counterfeit trademark under 15 U.S.C.§ 1127; 19 C.F.R. § 133.21; see also 19U.S.C. § 1526(e). Once the CBP deter-mines that there is probable cause that acounterfeit violation exists, based on thefactors expounded in Polaroid Corp. v.Polarad Electronics Corp., 287 F.2d 492(2d Cir. 1961) (the “Polaroid factors”), it will seize the counterfeit goods.Registered, but unrecorded marks (withCustoms) may also be seized pursuant to19 U.S.C. § 1595a(c)(2)(C) (trafficking incounterfeit goods). Seized and forfeitedmerchandise must be destroyed unless theintellectual property rights owner provideswritten consent and the goods are notunsafe or do not pose a health risk.

Confusingly Similar Marks. Goods thatare considered confusingly similar to reg-istered and recorded marks are detained,and the importer has 30 days to prove thathe received permission from the trade-mark owner or that he has a personalexemption. If the importer is unable toprove either of these or is not willing to

Trademarks at the BorderContinued from cover

faced with an infringing import, the ITCis worth serious consideration. �

James B. Altman is a member of Miller& Chavalier Chartered. He specializes insection 337 litigation.

Endnotes1 For the period 1995–2004, section 337

investigations involved products from Taiwan(17 percent), China (14 percent), Japan (11percent), Hong Kong (7 percent), Canada (6percent), Germany (6 percent), Korea (5 per-cent), and other countries (34 percent).

2 Section 337 also authorizes the ITC toissue what is known as a TemporaryExclusion Order (TEO). Somewhat like a pre-liminary injunction proceeding, and likewiserequiring a showing of irreparable harm, aTEO investigation includes largely full dis-covery and a substantial hearing within about90 days. Because of the punishing schedule of

such a proceeding, they have been rare, andcomplainants often settle for converting theTEO into a normal investigation with a some-what expedited schedule.

3 There were 83 preliminary injunctionsissued in patent cases between October 1,1982, and December 31, 1993, or one every1.6 months. Steven E. Shapiro, “PreliminaryInjunction Motions in Patent Litigation,” 33IDEA: J.L. & TECH. 323, 325 (1993). In oursample based on a LEXIS survey coveringpatent decisions from January 1994 throughDecember 2003, there were 51 injunctions in120 months, or one every 2.4 months.

4 Donna M. Tanguay, Jack Q. Lever, Jr., andPaul E. Poirot, “Fast Remedies in Patent Cases:Preliminary Injunctions,” ABA Section of IP Law,1999 IPL Summer Conf. (June 23-27, 1999).

5 Nat’l Steel Car, Ltd. v. Can. Pac. R.R.,Ltd., Case No. 03-1256 (Fed. Cir., Jan. 29,2004), quoting Intel Corp. v. ULSI SystemTech., Inc., 995 F.3d 1566, 1568 (Fed. Cir.1993), quoting Ill. Tool Works, Inc. v. Grip-Pak, Inc., 906 F.2d 679, 683 (Fed. Cir. 1990).

6 Nat’l Steel Car, Ltd. v. Can. Pac. R.R.,Ltd., Case No. 03-1256 (Fed. Cir., Jan. 29,2004); Amazon.com, Inc. v.barnesandnoble.com, inc., 239 F.3d 1343 (Fed.Cir. 2001).

7 Medpointe Healthcare Inc. v. Hi-TechPharmacal Co., Case No. 04-1310 (Fed. Cir.,Nov. 17, 2004) (nonprecedential).

8 See, e.g., Jack Guttman, Inc. v. KopykakeEnterprises, Inc., 302 F.3d 1352 (Fed. Cir.2002); Nat’l Steel Car, Ltd. v. Can. Pac. R.R.,Ltd., 357 F.3d 1319 (Fed. Cir. 2004) (declin-ing to review the trial court’s claim construc-tion at the preliminary injunction stage). Butsee Oakley, Inc. v. Sunglass Hut Int’l, 316F.3d 13314, 1344 (Fed. Cir. 2003)(majorityimplicitly suggesting that the claim construc-tion must be “settled” even at the preliminaryinjunction stage).

9 The number of cases instituted per fiscalyear is: 1999 (12), 2000 (12), 2001 (32), 2002(16), 2003 (21), and 2004 (27). Fiscal 2005 ison track for in excess of 20 cases. Source: ITCAnnual Reports.


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obliterate the infringing mark, the mer-chandise will be seized and destroyed. 19C.F.R. § 133.22. The CBP also relies onthe Polaroid factors in assessing confusingsimilarity, with the greatest emphasis onthe similarity between two marks.

For famous marks, the CBP may relymore heavily on other Polaroid factors inassessing Infringement. For example, inone case, the CBP seized “Marlboro rodeoropes” under the “related goods” standard.

Gray Market (Parallel Imports). Genuinemerchandise that is manufactured abroad,but bearing a U.S. registered trademarkwithout the owner’s permission is com-monly referred to as “gray market goods”(also known as “parallel imports”). See 19C.F.R. § 133.23. Such a scenario mayoccur, for example, if the imports are gen-uine goods typically manufactured in aforeign country and imported into theUnited States without the U.S. trademarkowner’s consent. The customs regulationsincorporated Lever Bros. Co. v. UnitedStates, 981 F.2d 1330 (D.C. Cir. 1993)(the “Lever rule”) in 1999 to protect U.S.trademark owners and consumers againstthe importation of gray market goods.Trademark owners asserting that “physicaland material differences exist must statethe basis for such a claim with particulari-ty, and must support such assertions bycompetent evidence and provide sum-maries of physical and material differ-ences for publication [in the CustomsBulletin].” See 19 C.F.R. §§ 133.2(e), (f).

Practitioners should note that merchan-dise will not be restricted if a label isplaced on the imported merchandise inclose proximity to the trademark appear-ing on the goods, stating that “[t]his prod-uct is not the product authorized by theUnited States trademark owner for impor-tation and is physically and materially different from the authorized product.” 19C.F.R. § 133.23(b).

Enforcement of Federal Court OrdersIn addition to border protection andenforcement through administrativeaction, trademark owners may seek privateredress by filing a civil action in federaldistrict court, requesting injunctive reliefand/or monetary damages. This processcan be more time-consuming and expen-sive than the administrative remediesavailable through the CBP. Once aninjunction is obtained from a court, it maybe presented to the CBP for enforcement.

Under the Trademark Counterfeiting

Act of 1984, the Lanham Act provides forex parte seizures where counterfeit marksare used in conjunction “with the sale,offering for sale, or distribution of goodsor services.” See 15 U.S.C. § 1116. Inaddition, ex parte trademark seizures mayarise under 15 U.S.C. § 1114(1)(a) (likeli-hood of confusion).

When preparing an application for exparte seizure to a court, an applicant mustprovide the court with factual and legalgrounds for the request (including affi-davits supporting such assertions) as wellas a surety bond determined adequate bythe court for the payment of damages ifthere is a wrongful seizure. Once an exparte seizure order is issued, a court musthold a hearing no sooner than 10 days andnot later than 15 days unless waived by allparties, the applicant for the order showsgood cause for another date, or thedefending party consents to a differentdate. The court must order that service ofa copy of the order be made by a federallaw enforcement officer (such as an offi-cer or agent of customs) who, upon making service, shall then carry out theseizure directed by the order. See 15U.S.C. §§ 1116(d)(2)–(11). Court ordersmay simply be presented to the CBP fieldoperations office providing oversight overthe relevant port(s) of entry.

In conclusion, trademark owners haveseveral tools available through the CBPand federal courts to protect their marks

against the importation of counterfeit orinfringing products. Practitioners shouldbecome familiar and work closely withCBP agents in order to effectively monitorimports for infringing articles or for theenforcement of seizure orders. �

Steven J. Wadyka, Jr. is a shareholder inthe Intellectual Property Group atGreenberg Traurig, LLP, and Janet ShihHajek is an associate in the IntellectualProperty Group at Greenberg Traurig, LLPin McLean, Virginia. The authors wish tothank their colleague, Susan Renton, Esq.,of counsel in the Global Trade PracticeGroup at Greenberg Traurig, for her con-tributions to and insight into this article.

Endnote1 According to the CBP’s “Yearly

Comparisons,” there were approximately 6,500seizures in 2003 (700 more than in 2002)involving trademark rights violations, with adomestic value of $94,019,227. By midyear2004, the total domestic value of all seizureswas $64,403,339 compared with $37,985,143by midyear 2003. The top commodity seizedin 2003 was cigarettes, comprising 44 percentof the products seized. Clothing came in sec-ond at 15 percent, handbags/wallets/backpackscame in third at 12 percent and media (includ-ing recorded music and motion pictures andcomputer software) comprised 8 percent ofmerchandise seized. In addition, 66 percent ofthe seized imports in 2003 originated in China(the largest percentage) and Hong Kong camein a far second place with 9 percent of goodsoriginating there.

Keep up with everything theIntellectual Property LitigationCommittee has to offer!

Visit our Web site at:www.abanet.org/litigation/committee/intellectual/home.html

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Quick IP Relief—The ITC, Rocket Dockets, and Preliminary InjunctionsBy James B. Altman 1

Trademarks at the Border: A Practitioner’s PerspectiveBy Steven J. Wadyka, Jr. and Janet Shih Hajek 1

NTP v. Research in Motion: Charting the Perimeterof United States Patent LawBy Henry C. Su 3

Using the Tariff Act’s Section 337 in IP Border EnforcementBy Bryan Schwartz 7

Trade Secret Law and Protecting Your Client’s ProcessBy Kristy Joi Downing 8

In This Issue...

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Rocket Dockets, and Preliminary Injunctions